We are all now familiar with terms such as "self-quarantine" and "social distancing" that just a few weeks ago, would have triggered a confused look. In the United States, cities have ordered residents to stay at home, and counties have ordered the closure of "nonessential" retail businesses, beaches, parks and recreational venues. These restrictions have forced individuals and businesses to adapt their daily routines with no clear end in sight. Many are left wondering whether the economic fallout that follows will excuse performance for contracts they no longer need or can no longer fulfill. The most reasonable response would be for tenants, landlords, lenders, and insurance carriers to work with each other to create a resolution that is equally painful for all. Of course, if most people were reasonable, we lawyers would most likely be out of a job.

During these uncertain times, the first place many will look to is the force majeure clause buried at the end of their contracts with other boilerplate provisions. A force majeure clause excuses performance for one or both parties due to an extraordinary event. These events are primarily "Acts of God." Courts have interpreted an act of God to be limited to extreme natural weather events. Given this narrow interpretation, a health pandemic is not an act of God, or is it?

Logic dictates that businesses could not have prevented the COVID-19 outbreak with any reasonable care or foresight. The head of the World Health Organization himself stated, "We are in unchartered territory. We have never before seen a respiratory pathogen that is capable of community transmission, but which can also be contained with the right measures." That last part of the sentence is the biggest wrinkle the courts will face in the imminent monsoon of litigation over this issue. Because COVID-19 can be "contained with the right measures," federal, state, and local governmental agencies dove in and mandated by civil orders various quarantines, business closures and lockdowns. It is axiomatic that the affected business owner has no control over this, but ultimately, it's the governments using their inherent power for the betterment of the community at large. So how can a business owner possibly comply with their contractual obligations when they have no business to run due to a government closure, not the virus itself?

On March 30, Gov.Ron DeSantis issued a "stay-at-home" policy mimicking the city of Miami's already existing policy. While individuals are restricted by federal, state and local governments to their homes, parties will certainly trace contractual challenges to the government closure, rather than the coronavirus. Once those restrictions are lifted, courts might not find that the government closure was the ultimate obstacle preventing performance, but rather individuals who may still confine themselves to their homes out of fear. It is well established that fear alone will not excuse performance. However, there is still a good amount of gray area in between.

For those under current contracts, the economic fallout that follows the coronavirus might not excuse performance either. Some thoughtful parties may expressly define an act of God to include a pandemic that would certainly allow the force majeure clause to come into play. But many transactional lawyers probably have not considered anything like COVID-19. So, are you out of luck? Not exactly. There are alternative defenses such as the doctrine of impossibility and frustration of purpose.

Under the doctrine of impossibility of performance, a party is relieved from performing a contractual obligation due to no fault of their own; the party could neither have foreseen the risk at the time of entering the contract or prevented the event in question from occurring. This, and other legal doctrines, provide solid legal defenses for a business owner to cease performance of their contractual obligations.

The same holds for business interruption insurance. These insurance policies cover the loss of income that a business suffers due to total or partial business closure. Policy forms are both standard and varied based on express exclusions to coverage, and the coronavirus might not fall within the scope of a delineated event-triggering coverage. We are already seeing litigation emerge to obtain a determinative ruling on whether COVID-19 can be interpreted to have caused a physical loss or damage to an insured's property within the meaning of business interruption coverage provisions a question many courts and juries will be asked to answer.

Given the coronavirus' novelty, there are arguments for both sides. We will certainly witness a great shift in the language of future policies as we strive to define "pandemics" as a matter of law. But in the meantime, if reasonable heads do not prevail, the courts will be seeing this issue all over the country, and business owners will fight to keep their livelihoods afloat.

—Sandra Mejia, a University of Miami Law Student, contributed to this article.

Javier A. Lopez is KTT's managing partner and co-chair of complex and commercial litigation with experience in high-profile cases, representation of international clients and advising. He may be reached at [email protected].